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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

The following table summarizes the provision (benefit) for U.S. federal, state, and foreign taxes on income from continuing operations:


	Year Ended December 31,
In thousands	2019		2018		2017
Current:
Federal	$	4,859	$	(7,695)	$	7,679
State and local	2,179		(362)		3,841
Foreign	13,771		14,618		12,139
Total current	20,809		6,561		23,659

Deferred:
Federal	2,334		(17,463)		40,340
State and local	(1,846)		(4,492)		(1,144)
Foreign	(6,033)		(22,906)		3,480
Total deferred	(5,545)		(44,861)		42,676

Change in valuation allowance	5,353		25,730		7,991
Total provision (benefit) for income taxes	$	20,617	$	(12,570)	$	74,326

Income Tax Rate Reconciliation

A reconciliation of income taxes at the U.S. federal statutory rate of 21% for 2019 and 2018 and 35% for 2017 to the consolidated actual tax rate is as follows:


	Year Ended December 31,
In thousands	2019		2018		2017
Income (loss) before income taxes
Domestic	$	57,261	$	(50,463)	$	220,342
Foreign	15,771		(58,688)		(85,767)
Total income before income taxes	$	73,032	$	(109,151)	$	134,575

Expected federal income tax provision	$	15,337	$	(22,922)	$	47,101

Change in valuation allowance	5,353		25,730		7,991

Stock-based compensation	(2,130)		(104)		(1,225)
Foreign earnings	(15,610)		(15,799)		(22,045)
Tax credits	(8,794)		(10,502)		(777)
Uncertain tax positions, including interest and penalties	13,060		7,727		(7,637)
Change in tax rates	4,999		335		41,125
State income tax provision (benefit), net of federal effect	2,805		(4,524)		4,986
U.S. tax provision on foreign earnings	129		25		33
Domestic production activities deduction	—		—		(2,534)
Local foreign taxes	1,471		2,540		2,324
Transaction costs	—		974		2,643
Other, net	3,997		3,950		2,341
Total provision (benefit) from income taxes	$	20,617	$	(12,570)	$	74,326

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities consist of the following:


	December 31,
In thousands	2019		2018
Deferred tax assets
Loss carryforwards⁽¹⁾	$	343,614	$	370,120
Tax credits⁽²⁾	98,098		94,359
Accrued expenses	46,846		43,213
Pension plan benefits expense	17,310		18,086
Warranty reserves	12,961		13,470
Depreciation and amortization	6,112		5,709
Equity compensation	4,685		5,390
Inventory valuation	1,069		1,415
Deferred revenue	8,951		9,062
Leases	13,876		—
Other deferred tax assets, net	9,777		11,319
Total deferred tax assets	563,299		572,143
Valuation allowance	(320,649)		(323,822)
Total deferred tax assets, net of valuation allowance	242,650		248,321

Deferred tax liabilities
Depreciation and amortization	(161,044)		(178,358)
Leases	(12,976)		—
Other deferred tax liabilities, net	(6,540)		(6,676)
Total deferred tax liabilities	(180,560)		(185,034)
Net deferred tax assets	$	62,090	$	63,287

⁽¹⁾For tax return purposes at December 31, 2019, we had U.S. federal loss carryforwards of $187.5 million, which begin to expire in the year 2020. At December 31, 2019, we have net operating loss carryforwards in Luxembourg of $992.7 million, the majority of which can be carried forward indefinitely, offset by a full valuation allowance. The remaining portion of the loss carryforwards are composed primarily of losses in various other state and foreign jurisdictions. The majority of these losses can be carried forward indefinitely. At December 31, 2019, there was a valuation allowance of $320.6 million primarily associated with foreign loss carryforwards and foreign tax credit carryforwards (discussed below).

(2)For tax return purposes at December 31, 2019, we had: (1) U.S. general business credits of $39.0 million, which begin to expire in 2022; (2) U.S. alternative minimum tax credits of $0.8 million that can be carried forward indefinitely; (3) U.S. foreign tax credits of $50.5 million, which begin to expire in 2024; and (4) state tax credits of $34.4 million, which begin to expire in 2020.

Summary of Valuation Allowance

Changes in the valuation allowance for deferred tax assets are summarized as follows:


	Year Ended December 31,
In thousands	2019		2018		2017
Balance at beginning of period	$	323,822	$	285,784	$	249,560
Other adjustments	(8,526)		12,308		28,233
Additions charged to costs and expenses	5,353		25,730		7,991
Balance at end of period, noncurrent	$	320,649	$	323,822	$	285,784

Unrecognized Tax Benefits Related To Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


In thousands	Total
Unrecognized tax benefits at January 1, 2017	$	57,626
Gross increase to positions in prior years	3,367
Gross decrease to positions in prior years	(5,559)
Gross increases to current period tax positions	6,453
Audit settlements	(5,169)
Decrease related to lapsing of statute of limitations	(3,445)
Effect of change in exchange rates	3,429
Unrecognized tax benefits at December 31, 2017	$	56,702

Gross increase to positions in prior years	22,943
Gross decrease to positions in prior years	(24,949)
Gross increases to current period tax positions	63,869
Audit settlements	(2,977)
Decrease related to lapsing of statute of limitations	(1,368)
Effect of change in exchange rates	(1,662)
Unrecognized tax benefits at December 31, 2018	$	112,558

Gross increase to positions in prior years	1,067
Gross decrease to positions in prior years	(3,296)
Gross increases to current period tax positions	13,762
Audit settlements	—
Decrease related to lapsing of statute of limitations	(1,574)
Effect of change in exchange rates	(802)
Unrecognized tax benefits at December 31, 2019	$	121,715


	At December 31,
In thousands	2019		2018		2017
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate	$	120,410	$	111,224	$	55,312

The net interest and penalties expense recognized is as follows:


	Year Ended December 31,
In thousands	2019		2018		2017
Net interest and penalties expense (benefit)	$	708	$	(990)	$	(543)


	At December 31,
In thousands	2019		2018
Accrued interest	$	2,849	$	2,127
Accrued penalties	1,681		1,758

We file income tax returns in various jurisdictions. We are subject to income tax examination by tax authorities in our major tax jurisdictions as follows:


Tax Jurisdiction						Years Subject to Audit
U.S. federal						Subsequent to 2001
France						Subsequent to 2012
Germany						Subsequent to 2013
Brazil						Subsequent to 2013
United Kingdom						Subsequent to 2015
Italy						Subsequent to 2014